Nothing is on paper yet, but the Defense Department says it is in the very early stages of creating a “3.0” version of its ongoing Better Buying Power initiative.

The newest edition will focus on making sure the military doesn’t fall behind in technological superiority.

Frank Kendall, the undersecretary of Defense for acquisition, technology and logistics, said the next edition of the Pentagon’s effort to improve its acquisition system will zero in on an issue that he has become increasingly worried about as sequestration-level budgets take a toll on DoD’s investments in research and development.

While he emphasized that Better Buying Power 3.0 still is in the idea stage, he said it will revolve around the notion that DoD can’t afford to put technology advances on hold just because research dollars are shrinking.

“The first iteration was about the rules. The second one was about creating tools to help people think and do a better job of setting up business deals and executing them. The third is probably going to be about innovation and how we move things more rapidly and more effectively into the hands of warfighters,” he said Tuesday at the 15th annual Science and Engineering Technology Conference sponsored by the National Defense Industrial Association in College Park, Md.

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In public forums over the past several months, Kendall increasingly has been outspoken about his concern that potential nation-state competitors are catching up to the U.S. at a pace that makes him very uncomfortable. He did not offer details of those advances, saying his assessments are based almost entirely on classified information.

But he said the bottom-line message he’s trying to deliver to Congress and other budget decision makers is that DoD no longer can afford to take its longstanding technological superiority for granted.

“China is investing continuously, they’re investing smartly, and their technologies are not things we can ignore. They’re very competitive,” he said. “So what are we doing? We’re cutting our R&D budget from $80 billion a year to $63 billion. There is not adequate recognition of the fact that this is still a contest. It is not in our interest to be complacent about that, and in my view, we have gotten complacent. Ever since we demonstrated our dominance in the Gulf War in 1991, there’s been this presumption that we’re going to be dominant. I don’t think we can afford to make that presumption anymore.”

Putting money back into the budget

The department’s overall research, development, test and evaluation budget fell by 14 percent between fiscal 2009 and the 2015 budget request, but officials say the Office of Management and Budget’s budget passback to DoD for the current budget cycle sent a signal that the White House intends to protect the Pentagon’s innovation accounts from any further cuts in the next few years, especially with regard to basic research.

To make the most of the research dollars the department has left, DoD plans to rely heavily on the concept of rapid prototyping.

The basic logic is that while the department doesn’t have enough money to pump into serious development of many new weapons systems right now, it needs to repeat what it did in the 1970s, when budgets were in a serious period of contraction and DoD couldn’t afford many new starts. But at the time, it decided to pump money into research for the prototypes that eventually became the Apache helicopter, the Abrams tank, the Aegis naval weapons system and the Patriot missile a decade later when military funding was flowing freely once again.

The prototyping path has the benefit of keeping at the most vital portions of the department’s science and technology base on task, officials said. They worry that the underpinnings of the military research enterprise will start to wither away if DoD does not allocate some significant funding toward keeping the industrial base’s smartest people on the job.

“The benefit of prototyping is that you can look at advanced technologies without getting committed to long-term procurement programs,” said Robert Baker, the deputy director for plans and programs in the office of the assistant secretary of Defense for research and engineering. “At the same time, you can keep your design teams in place and also your manufacturing capability. It’s a way to get new technology in the acquisition process where you can evaluate the future operational concepts without getting into very expensive programs in the immediate budget.”

Speed to market

Earl Wyatt, the deputy assistant secretary of Defense for rapid fielding, said DoD will focus in the foreseeable future on getting new military capabilities from industry in a streamlined fashion, in small pieces, and quickly.

He said that’s one of the main reasons Kendall took a personal interest in rewriting DoD’s primary rulebook for acquisition: DoD instruction 5000.02.

“One of the reasons was to make sure we stay focused on streamlining acquisition,” Wyatt said. “Many people have gotten the idea that the streamlined acquisition processes and rapid fielding we’ve been using were just about the war. That was very important, but the key is speed to market. If I can make sure the capability is proven, it meets the needs, that I’ve gotten the costs down so that I can buy enough, then I can produce it. And then I can give you a better product and one that’s affordable.

But Kendall said while the department will rely on rapid prototyping for a while, the entire intent behind the plan is to make sure DoD has game-changing systems in the pipeline that are ready to build once the cyclical downturn in Defense spending reverses itself. At some future date when procurement dollars start flowing again, he wants to have plans on the shelf to start building the systems that the Pentagon can’t afford to start right now.

“We need to be thinking about what comes next,” he said. “What’s the next suite of capabilities we can put together in a way that’s creative? One area we’re working in is the Air Dominance Initiative. I’ve asked DARPA and the Air Force to lead an initiative to look at what life after the F-35 looks like. What are we going to do next to ensure that we control the air? Because in modern warfare, control of the air is what leads to everything else. We have to have that. We’re looking for ideas like that, and we’re going to continue to explore them.”

Despite DoD’s declining research and development resources, Kendall also made it clear that he doesn’t expect the defense industry to shoulder the cost of what are likely to be mostly-speculative investments under the push for rapid prototyping.

Those costs, he said, should be almost entirely borne by the government.

“We’ve had a couple of cases in the services where people have tried to induce industry to do cost shares for prototyping programs, and I’ve pushed back on them,” he said. “If we don’t have a high probability of taking whatever we’re working on into full-scale development, I don’t think it’s reasonable to ask industry to cost-share. Industry should be making investments where there’s a return. That’s what they should do.”

On DoD focuses on the programs and policies that affect the Defense Department. Each week, Defense Reporter Jared Serbu speaks one-on-one and in depth with the people responsible for managing the inner workings of the federal government's largest department, and those who know it best.